As it should and ought to be...

Paul Graham swings and misses: what he doesn't get about TV

Paul Graham,

From 30K feet, all video is becoming Internet video; it is digital and accessed via standard http (progressive download) protocols.  However video being on the Internet doesn’t mean that it will be freely available.  Information may want to be free, but video doesn’t.  It is a mistake to assume or even hope that a $60 high speed broadband connection will bring unlimited data, TV, and phone service without any other costs, and less ads to boot.

It is frankly amazing that in the modern world, where communication has supplanted security, energy, and food production in total economic impact on our world, that we pretend it should cost dramatically less to obtain on a monthly basis than those other less valuable things. We as people are supposed to pay more for the things higher up Maslow’s hierarchy…. and cable, FTTH, and Satellite TV fit that bill.

Recently, we’ve seen NBC and Fox (and likely the major cable players) flex their muscle to ensure that Hulu.com’s major TV offerings were stripped from boxee, an innovative and elegant Graphical User Interface for consuming Internet video.  I were not surprised, and indeed I was gladdened to find out this past week, the Big TV providers will be offering up very similar services, but only available online to their paying customers.

This doesn’t mean boxee isn’t a genius application.  Built on the open source framework X-Box Media Center (XBMC), it proved that IP delivered video had a place in the living room.  Little ole boxee’s success has spurred all of TV manufacturers more quickly adopt System on a Chip (SoC) architectures… every TV will soon have a unique IP address.

Of course, moving IP video to the living room has other positive impacts:

• It provides for the long-tail, indeed everything ever produced will soon be available to watch on TV (in lower quality video) … even much maligned Don Knotts fetishists will be sated.
• It allows for an interactive experience to be layered dynamically (via the frame buffer) over High-Def digital broadcasts, certainly we’ll soon be able to see wonderfully vicious tweets popping up over David Caruso’s head when he takes off his glasses and mutters, “Drive by, Miami style.” (CSI Miami 302: Pro Per).
• It encourages millions of American students to skip attending prestigious universities and instead learn YALE ECON 159: Game Theory with Ben Polack at their home.

All of this of course means you are wrong.  The TV won.  Actually, Big TV won.

Here is an equation to explain my point:

Where Big TV = professional producers and the pipe providers, Paul Graham is wrong.

Certainly, reclaiming all that freshly wasted digital OTA broadcast spectrum for some other kinds of services is a great idea.  Expect it in the next 20 years.  Certainly, justifying linear programming models via networks is a fools errand.

But just as certainly:

• The same PROS who make large audience programming are going to continue to hold forth on Ultra HD screens for large audiences decades from now and make ungodly sums of money doing it.
• The same actors who can command multi-million dollar contracts will continue to do so.
• The same pipe providers (Cable/Fios/Wimax/Satellite) will enforce “TV Everywhere” policies that make sure you are paying $120 in 2009 dollars for TV and Broadband access.

To give you some Big TV math to work with:

One hour of Prime Time TV is worth approximately $.64 cents for every single viewer (32 :30 second ads * .02 cents per ad).

And there are some better ways to recover that $.64 cents. This gets into security /privacy issues, but certainly someday it is obvious that the viewer will be able to expose private data about themselves (their Facebook account) in order to be better targeted with advertising on their TV, and thereby opt to see less advertising that still covers the $.64 cent nut.

Another way to recover the $.64 cents is to embed advertising directly into the program. Years ago, after seeing Tivo for the first time, I helped found a company that produced the first modern large scale Branded Entertainment play - we convinced Ford Motor Cars to pay to create a TV series, “No Boundaries,” which we gave away to the WB.

Our new company, SaysMe TV has a new model, it is actually the reverse of Branded Entertainment.  It is a new form of TV commercial, available for national “local cable” campaigns meant to be “Tivo-resistant.”

Instead of using brand dollars to create programming that can’t be skipped, it instead urges brands to continue buying TV commercials, but to insert content into those commercials that people are more likely to watch: important local event and community announcements.

This gets to your locality idea exactly. We’re not concerned with local TV programming.  But we think viewers will pay very close attention to Nike commercials advertising their local high school football games.

Finally, you should make yourself aware of the work being done by companies like Visible World, where truly one-to-one Big TV programming is coming down the pike, much faster than your realise.

How To Save Newspapers: Read EVERYTHING Local

First off, I can’t promise you this plan will save print.  Nothing will.

Paper costs too much.  Nicholas Carlson make the point at Blodget’s blog.

But who cares about print?  When we gnash our teeth about the death of newspapers, what we’re concerned about is how to keep local reporters working in our communities credibly covering what is happening around us.

The trendy response is that papers (like the NYT) should charge money again for online subscriptions, or rely on micro-payments.  This of course goes against Kevin Kelly’s more and more for free. Kelly is smarter, and in this case he’s also correct.

Frankly though, I don’t care about the NYT like Brill does.   I want to read thousands of articles a month.   And I’m worried about the thousands of local papers, so instead I figured out a way to keep them around.

In order to save papers we’re going to need some readily available ingredients:

1. Google is going to have to have their feet held to the fire.  This shouldn’t be a problem since their CEO, Eric Schmidt, struck a match and has taken off his socks.
2. The Associated Press is going to have to forget about it’s online syndication model.  (In fact, online syndication revenue for the newswires needs to be dead.)  But changing how AP works, to save the 1,500 U.S. daily newspapers that own it, is no big deal.

With these two puzzle pieces, the day is saved.  Here’s the plan:

1. Google will license all US newswires with AP’s explicit support (they’ll help cajole the other newswires), and will alter Google News to display only the headlines, not the abstracts.  They will do this for a song, but they will have NO rights to publish any of the articles.
2. Current syndication contracts will be abandoned by newspapers.
3. Readers and bloggers will now have via Google News ALL the headlines and a “proxied local link” to all the stories.
4. Here’s the rub. Every single paper in America at their website will have (granted to them via Google’s master license) every single article carried on the wires.

A localization proxy server will ensure that every link you click at Google News, or from your favorite blogger… you’ll read the article at your local paper’s web site.  Newspaper sites themselves will enforce this “read local” policy by automatically re-directing non-local IPs back to the proxy.

That’s the plan, all news traffic stays local.  This has many strong economic advantages:

1. Local advertisers can easily compete with national advertisers, without much thinking, and they can be sure that they are only buying eyeballs in their town.
2. Local reporters and editors handling local politics, sports, and schools, and slice of life, will have a revenue stream that can support them.  Mitch Ratcliffe has done some good napkin math on this, my idea significantly augments it.   In my plan, the average reader will now spend tens of hours a month at their local paper’s web site, the entire web will continually lead them back to their local paper.
3. This aids in local community outreach, because local stories get displayed right next to national stories.  That school budget story has a much better chance of everyone in town reading it.

The goal of “Read Local” is not brute legislation, it is libertarian paternalism.  Just a gentle nudge.   Using default settings at Google News (just like turning off Safe Search in Google Images), NYC readers can pick the Post, or the Times, or the Sun, or maybe the paper of their hometown in Ohio.  Each online paper will still have its own editorial approach, its own lay out, its own front page… and most importantly be able to choose its own ad network (sorry Google).

Ultimately, this system can nudge people to read local and keep all news ad revenue at home, which is the best chance local papers have of surviving.

The NYT and WSJ are special cases, they (like other papers) would have to decide if they wanted to hoard their exclusive content and make readers come to them, or instead become the default paper of their core audience, and have a copy of everything else to offer.